My sister, who has 100% disability from the military, is trying to get a VA renovation loan through CrossCountry Mortgage to purchase a house next door to us. The house is listed at $350,000 but requires significant repairs, and her debt-to-income ratio prevents her from qualifying on her own. She’s asked our dad, who is also 100% disabled from the military and in his upper 70s, to co-sign. He owns a property that’s fully paid off, but I’m really concerned about the risk to his finances and property if he co-signs. My sister says she’ll remove him from the loan when she refinances, but she has never bought a house before and I want to make sure our dad is protected and want to know the cons of cosigning for her.
Well, we know Clark almost always says don’t co-sign for anybody. But the devil is in the details, as they say.
Does she have good credit? Will she be able to make the payments? Your Dad has to realize that if she can’t make payments he is on the hook. Big decision.
I assume that your sister was denied by the VA Home Loan program prior to her being denied by a commercial lender. Purchasing a home that requires significant repairs will add considerable additional debt. As noted by @glasspilot your father should not cosign for the loan since he will likely end up having to contribute to the payment. Your sister needs to first address her high debt.
She needs to consider what might happen if he passes away. The house could be considered part of his estate with him as a co-signer, and/or she may have to requalify on her own once the mortgage company realizes that he’s no longer living. At the end of the day, she’s trying to purchase more home than she can afford.
Too much on the line for her father. Given the situation, a family member is usually trusted and you would be willing to do anything for a loved family member especially a son or daughter BUT things happen although not on purpose someone can be left holding the bag as they say and it could ruin someone’s life by putting them in financial distress. I wouldn’t do it no matter how much it hurts to turn them down. So, listen to Clark…don’t do it!